Good day, and thank you for standing by and welcome to the FibroGen Fourth Quarter 2021 Financial Results Conference Call. [Operator Instructions] Please be advised that this call is being recorded. [Operator Instructions] I would now like to hand the conference over to your host today, Mike Tung, Vice President of Corporate Strategy and Investor Relations. You may begin.

Thank you, Jason, good afternoon everyone. I'm Michael Tung, Vice President of Corporate Strategy and Investor Relations at FibroGen. Joining me on today's call are Enrique Conterno, our Chief Executive Officer; Dr. Mark Eisner, our Chief Medical Officer; Juan Graham, our Chief Financial Officer; Dr. John Hunter, our Chief Scientific Officer; Thane Wettig, our Chief Commercial Officer; and Chris Chung, our Senior Vice President of China Operations. The format for today's call includes prepared remarks from Enrique and Juan, after which we will open up the call for Q&A. I would like to remind you that remarks made on today's call include forward-looking statements about FibroGen. Such statements may include, but are not limited to, our collaborations with AstraZeneca and Astellas, financial guidance, the initiation, enrollment, design, conduct and results of clinical trials, our regulatory strategies and potential regulatory results, our research and development activities, commercial results and results of operations, risks related to our business and certain other business matters. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in FibroGen's filings with the SEC, including our most recent Form 10-K and Form 10-Q. FibroGen does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The press release reporting our financial results and business update and a webcast of today's conference call can be found on the Investors section of FibroGen's website at www.fibrogen.com. And with that, I would like to turn the call over to Enrique Conterno, our CEO. Enrique?

Very good. Thank you, Mike, and good afternoon, everyone, and welcome to our fourth quarter and full year 2021 earnings call. Briefly, before we begin I would like to highlight that today is Rare Disease Day, which is especially relevant to us given our pamrevlumab Phase III programs and our roxadustat MDS program. As we enter 2022, we're excited about our future as we continue to advance our Phase III pamrevlumab clinical trials in three indications: continue our strong performance with roxadustat in China, launch of roxadustat in Europe and expand our research and development portfolio in the immuno-oncology and autoimmune space. On today's call, I intend to cover recent developments and key events, beginning with pamrevlumab. Juan Graham, our CFO, will then review the financials. After which, we will open up the call for your questions. Starting with Slide 3. FibroGen is positioned to create significant value for patients and shareholders by executing on our 3 areas of focus, number one, accelerating the development of pamrevlumab in three indications with significant unmet medical need, idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer and Duchenne muscular dystrophy. Number two, ensuring commercial success of roxadustat in patients with chronic kidney disease outside the U.S. while continuing to explore a path forward in the U.S. And number three, increasing our research productivity to advance novel programs that leverage internal expertise and accessing extra innovation for additional pipeline opportunities. Let's move to our clinical trials focusing on pamrevlumab on Slide 4. Pamrevlumab is a wholly owned asset in Phase III clinical trials for 3 highly important indications, as we said, IPF, LAPC and DMD. Today, we announced completion of enrollment of our LAPIS Phase III study of 284 patients with locally advanced unresectable pancreatic cancer. We also completed enrollment of the LELANTOS-1 Phase…

Thank you, Enrique. While 2021 was a difficult year due to the CRL outcome, I'm inspired by the positive energy and resilience of our team. I'm optimistic about the progress made on our pamrevlumab Phase III clinical trial recruitment and about the potential opportunity pamrevlumab represents for patients suffering from diseases such as idiopathic pulmonary fibrosis, locally advanced pancreatic cancer and Duchenne muscular dystrophy. In addition to providing patients with a therapeutic option in these diseases, pamrevlumab also presents a very attractive commercial opportunity for FibroGen. I'm confident we are well positioned for the future to deliver on our vision to bringing innovative medicines to patients and diseases of significant unmet need. Now diving into our financials. As we announced today, full year revenue for 2021 grew by 33.5% to $235.3 million versus $176.3 million in 2020. Total revenue for the fourth quarter was $16.5 million as compared to $65 million for the same period in 2020. As we go deeper into our revenue performance and as a reminder, we record 4 sources of revenue. First, license revenue, which is allocated from license payments and milestones earned or deemed probably of being earned in the period. Second,, development revenue, which is revenue from development expense reimbursement and revenue from other development activities. Third, net product revenue, which is the revenue from sales to the distribution entity jointly owned by AstraZeneca and FibroGen or JDE in China from which we recognize the transfer price as well as our direct sales to distributors. And fourth, drug product revenue which includes transfer price payments from our collaboration partners for our commercial-grade API or bulk drug product shipments to them. During the fourth quarter, we recorded $10 million in development revenue from our collaboration agreements associated with codevelopment efforts for roxadustat. During the quarter,…

In closing, we remain committed to advancing pamrevlumab as a potential first-in-class medicines in Phase III development in three indications with significant unmet medical need. Idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer and Duchenne muscular dystrophy. Roxadustat continues to perform very well in China, our partner Astellas is moving forward with commercialization of roxadustat in Europe and we have multiple regulatory submissions under review in other geographies. FibroGen and our partner AstraZeneca are in discussions to determine next steps in the U.S. As shown on Slide 12, we continue to have a strong financial position with approximately $590 million in cash and expect to end 2022 with $200 million to $300 million in cash. Additionally, we have multiple options to consider to further strengthen our balance sheet and cash position to ensure our long-term success. Now I would like to turn the call back to the operator for questions. Justin?

[Operator Instructions] Our first question comes from Michael Yee from Jefferies.

This is [indiscernible] for Mike Yee. Thanks for taking my question. So I guess two from here. So first one is, how are you thinking about the plans for roxa in the United States? And do you have a timeline in mind for the next steps? And could you also give some color on the potential scenarios for future regulatory process down the road? And maybe comment on the value proposition in the U.S. as well. And second one, could you also comment on roxa in China, especially on recent price adjustments from NRDL? Appreciating that's something that may occur every 2 years, so wondering if you could comment on your strategy to drive more China sales to counter pricing headwinds. And also please comment on the patent situation expectations please and how should we think about the tail value of roxa in China? Thank you.

Very good. Thank you for your questions. I'm going to first ask Mark Eisner to comment on the first question about the U.S. and potential scenarios there.

Yes. Thanks for the question Michael. It's Mark Eisner here. So in terms of CKD in the U.S., we're continuing to work with our partner AstraZeneca and the FDA. Those discussions are ongoing and we're continuing to evaluate our options there. In terms of timelines on that, we should be able to provide more information in the upcoming weeks. In terms of regulatory down the road, I think I answered that one. So I'll turn back to Enrique.

Chris, maybe you can provide a little of color when it comes to China, including how we're thinking about volume growth and what are we doing to counteract some of the price decrease with the NRDL new price and then also provide some color also on market exclusivity.

Absolutely, Enrique. So as was expected, the NRDL pricing happens every 24 months. So this was certainly not unexpected and the range of price cuts are also not unexpected. So the company in roxadustat had plans in place to really address the price cut with extension of duration of treatment and the lower out-of-pocket price, how we let that to expand the adoption in certain segments of the market, in particular in NDD where affordability on the out-of-pocket basis might have been challenging for HIF as a class. So we remain very optimistic about the outlook for 2022. We believe the increase in volume growth would offset the pricing and we are expecting topline growth in 2022 above 2021 despite the NRDL price cut. With respect to the patent situation, the patent dates also are known. There are currently a couple of things going on in terms of the patent regulation in China. It is still unclear in terms of what the regulations might be with patent term extension, but we are doing some scenario planning. And obviously there are different parties who are actively discussing with the government in terms of what might make sense to continue to encourage innovation in the People's Republic of China, which is one of their major country strategies. So we remain optimistic in terms of what that situation might be.

Thank you.

And our next question comes from Annabel Samimy from Stifel.

Hi, thanks for taking my questions. So I just had a question about the MDS and the CIA indication. So I know that the MDS indication is still ongoing. The CIA, I guess is still on hold. And so if you had any further thoughts about the risk-benefit equation for that population. And is it still fully owned or is it something that you could potentially monetize down the line? And then I guess for pamrevlumab, again are you considering any licensing of these programs? Are you going to stick with owning them singularly? Thanks.

Yes. Very good. Thank you very much, Annabel. I'm going to ask once again, Dr. Eisner to comment on MDS and in particular CIA and in particular to the benefit-risk profile.

Sure. So as you know, the Study 082, the MDS trial is ongoing. We've communicated that we should have topline results second half of this year, first half of next. We feel very excited about the potential there. We believe roxadustat could be a very, very efficacious therapy. But that's why we're doing the Phase III trial to evaluate that and provide a more comprehensive assessment of the benefit risk. In terms of CIA, we announced our Phase II completion not long ago. In terms of Phase III planning those discussions are ongoing with our partner AstraZeneca in the U.S. and with our partner Astellas for Europe and their territories.

Yes. I think you also asked Annabel whether MDS was fully owned, MDS is part of the partnership agreements with both AstraZeneca and Astellas. In terms of pam, I think, as we shared in the past, we do intend to launch pamrevlumab in the U.S. as FibroGen and we are considering partnering outside of the U.S., outside of Canada.

Thank you.

Thank you. And our next question comes from Alex Ramsey from William Blair. Your line is now open.

Hello, this is Alex on for Andy. I just had one question. In the 10-K, the company disclosed that it has received an SEC subpoena. And I was just wondering if you could elaborate on that and give us a sense of procedurally how these inquiries will go?

Yes. We've received a request for documents from the SEC. There's not much that we can say at this point in time other than we are collaborating with the SEC. And at the appropriate time, we will basically update investors as we know more.

Okay, great. Thanks so much.

Thank you. And our next question comes from Jason Gerberry from Bank of America. Your line is now open.

This is Perry on the line for Jason. Thanks for taking my questions. First, I have a question about the CKD category expansion with ESA and HIFs in China. The current split, it looks like is around 70-30. How do you expect this to evolve over time? Do you expect it to more become improved towards a 50:50 split? And do you expect that to happen as a result of category expansion overall? Or do you expect roxa to start eroding away at ESA directly based on clinical profile? And then just one other question on the LAPIS study and the pancreatic cancer indication for pamrev. Can you talk about the potential for an accelerated pathway submission post the event-free survival readout? Is there kind of a benchmark that you have to hit to really justify an accelerated pathway submission? Just want to get your thought process on that. Thanks.

Thank you for the questions. I'm going to ask Thane and Chris to comment on the question about the category expansion in China and the split between ESAs and roxadustat HIF-PHIs and what we expect in the future. And then, Mark if you could offer your some color on LAPIS and event-free survival and how are we thinking about that.

Should I start?

Sure.

So Thane, I will start and please supplement. So first of all, if we ask ourselves why is there a category expansion, the main idea behind here is we believe the ESA market in China is not equivalent to the anemia in CKD market. The CKD anemia market was underpenetrated because of some of the constraints of ESA because of the safety profile, the fact that it's an injectable and many other constraints, such as the need for intravenous iron to address inflammation. So the fact that we see category expansion is the direct evidence of the differentiation of the HIF class. So if you ask yourself, will the HIF class eventually take over 100% of the ESA class, the question would be, one, price and second, what are the sub-segments of the population where ESA continues to be sufficient and what is the equation of price versus value. So in terms of a terminal number, I personally expect the HIF class to continue to help grow the category and increase the share of that category. It's hard for me to guess what the terminal value would be. But I think there's significant differentiation of the HIF class in non-dialysis because of the oral nature and the fact that we could reach target without routine chronic supplementation of iron for that home-based population. Thane?

Thanks, Chris. Just a couple of additional points to make. If we take a look at the 12 months ending in 2021 versus the 12 months ending in 2020, roxadustat drove the substantial portion of the category growth. I think roxadustat's portion of that was over 75%. And so we would expect that to continue. It will continue based upon the positive experience from clinicians and patients, and then what Chris referred to as well in terms of the renewal of roxadustat on the NRDL and greater affordability from a patient pocket perspective. And so we do anticipate roxadustat to continue to capture a majority of that category growth. The final point is that we believe that the NDD category is largely untapped. The dialysis segment is very well defined. 90%-plus patients who are in dialysis are receiving treatment for their anemia associated with their chronic kidney disease, but there is still substantial opportunity that remains in the NDD category. And we think that value proposition for roxadustat will continue to be tailor-made for more and more patients being treated for their anemia in that NDD population.

Thank you, Thane. And Mark, maybe you can address the LAPIS EFS question.

Sure. So just to remind everybody, we are planning an interim analysis based on event-free survival, which is comprised of resection, lack of progression locally or distantly of disease and freedom from mortality or survival. Based on the interim analysis, we do have a predefined threshold for efficacy that would be utilized to decide whether or not there is potential to file a BLA for an accelerated approval. And that would be a decision made after FDA's feedback as well. So there's a number of steps there that we would take to make that decision.

Very good. Thank you.

Thank you. And I am showing no further questions. I would now like to turn the call back over to Enrique Conterno for closing remarks.

Very good. Now thank you very much for everyone's participation in today's investor call and your interest in FibroGen. Enjoy very much the rest of your day. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.